With incoming regulations set to create new markets as well as compliance burdens, businesses who keep pace with change will have a major first-mover advantage
Political action on a number of fronts is increasing the pace of legislative and regulatory change across multiple jurisdictions, making regulatory compliance ever more complex and challenging for businesses.
For example, climate change regulations are expected to make the energy transition a major compliance challenge for companies, especially in Europe.
We anticipate that there will be significant first-mover advantage for companies who position themselves at the vanguard of regulatory compliance and quickly adapt to new regulatory environments. Each new piece of legislation is likely to create new markets with clear regulatory frameworks that can be leveraged for new business opportunities, whether in terms of market differentiation or new markets altogether.
Organisations investing in regulatory compliance are likely to be at the forefront of progressive change, enabling them to adapt and grow organically in an environment where opportunities for inorganic growth are scarce, and will therefore be better positioned to weather future economic challenges.
For energy clients in particular, a strong focus on regulatory adaptation will encourage investment, be attractive to joint venture partners, and enable clients to obtain the necessary permits and licences for projects in the renewable energy and clean hydrogen spaces.
Insurers will also play a key role in helping companies to embrace these opportunities. The new and emerging risks presented by renewable energy and hydrogen production technologies will require substantial insurance capacity and underwriting expertise.
The most successful carriers will be those who can quickly adapt existing solutions for the benefit of clients operating in these new markets.
Similarly, commercial insureds and insurers who keep pace with regulatory change will benefit from opportunities created by incoming regulations in other areas, such as the Markets in Crypto-Assets Regulation (MiCA) regulations and the AI Act for regulating artificial intelligence in the European Union.
However, with the likelihood of a divergence between AI regulation in the EU and in other countries around the world, multinational businesses will need to be mindful of the variations in compliance obligations across multiple jurisdictions.